Question 1

The price elasticity of demand equals magnitude of the

Accepted Answer

A)  change in the price divided by the change in quantity demanded. 
B)  change in the quantity demanded divided by the change in price. 
C)  percentage change in the price divided by the percentage change in the quantity demanded. 
D)  percentage change in the quantity demanded divided by the percentage change in the price. 
A)  change in the price divided by the change in quantity demanded. 
B)  change in the quantity demanded divided by the change in price. 
C)  percentage change in the price divided by the percentage change in the quantity demanded. 
D)  percentage change in the quantity demanded divided by the percentage change in the price.

Question 2

Redbox rents DVDs for $1 per day via self-service kiosks located across the United States. The CFO of Redbox wants to identify how responsive consumers are to an increase or decrease in the daily price of a rental. The economic concept the CFO wants to understand is

Accepted Answer

A)  price elasticity of demand. 
B)  elasticity of supply. 
C)  changes in demand. 
D)  changes in supply. 
A)  price elasticity of demand. 
B)  elasticity of supply. 
C)  changes in demand. 
D)  changes in supply.

Question 3

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

Accepted Answer

Their separate elasticities do not indic

Question 4

-The figure illustrates Anne's demand for books. At ________ a book, Anne's demand for books is inelastic.

Accepted Answer

A)  all prices between $15 and $30 
B)  all prices between $10 and $15 
C)  all prices between $10 and $20 
D)  all prices below $30 
A)  all prices between $15 and $30 
B)  all prices between $10 and $15 
C)  all prices between $10 and $20 
D)  all prices below $30

Question 5

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Accepted Answer

A)  demand for Christmas trees is price inelastic. 
B)  demand for Christmas trees is price elastic. 
C)  supply of Christmas trees is inelastic. 
D)  supply of Christmas trees is elastic. 
A)  demand for Christmas trees is price inelastic. 
B)  demand for Christmas trees is price elastic. 
C)  supply of Christmas trees is inelastic. 
D)  supply of Christmas trees is elastic.

Question 6

Explain the total revenue test.

Accepted Answer

The total revenue test estimates whether

Question 7

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

Accepted Answer

A)  a decrease of more than 20 percent in the quantity of gasoline demanded. 
B)  an increase in the total revenue received from the sale of gasoline. 
C)  a loss of total revenue for gasoline producers, because at a higher price the quantity of gasoline demanded decreases. 
D)  no change in the quantity of gasoline sold because people need gasoline. 
A)  a decrease of more than 20 percent in the quantity of gasoline demanded. 
B)  an increase in the total revenue received from the sale of gasoline. 
C)  a loss of total revenue for gasoline producers, because at a higher price the quantity of gasoline demanded decreases. 
D)  no change in the quantity of gasoline sold because people need gasoline.

Question 8

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is ________ and the demand for plane tickets is ________.

Accepted Answer

A)  elastic; inelastic 
B)  inelastic; elastic 
C)  elastic; elastic 
D)  inelastic; inelastic 
A)  elastic; inelastic 
B)  inelastic; elastic 
C)  elastic; elastic 
D)  inelastic; inelastic

Question 9

A local transit authority charges $1 for a bus ride. An economics study suggests that in the price range from $0.50 to $1.50, the elasticity of demand for bus trips is 1.1. To increase its revenue, the transit authority should

Accepted Answer

A)  raise the fare. 
B)  lower the fare. 
C)  leave the fare as it is. 
A)  raise the fare. 
B)  lower the fare. 
C)  leave the fare as it is.

Question 10

The greater the substitutability between Northwest timber and Southeast timber, the ________ is the cross elasticity of demand between timber from the two regions and the ________ is the elasticity of demand for Northwest timber.

Accepted Answer

A)  smaller; smaller 
B)  smaller; larger 
C)  larger; smaller 
D)  larger; larger 
A)  smaller; smaller 
B)  smaller; larger 
C)  larger; smaller 
D)  larger; larger

Question 11

Microsoft raises the price of its Office software by 10 percent. As a result, the quantity of personal computers demanded at the current price decreases by 5 percent. What is the cross elasticity of demand for personal computers with respect to the price of Microsoft Office software?

Accepted Answer

A)  -2.0 
B)  -0.5 
C)  0.5 
D)  2.0 
A)  -2.0 
B)  -0.5 
C)  0.5 
D)  2.0

Question 12

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is ________ and if the price falls from $8 to $6 demand is ________.

Accepted Answer

A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic 
A)  elastic; elastic 
B)  elastic; inelastic 
C)  inelastic; elastic 
D)  inelastic; inelastic

Question 13

The income elasticity of demand is a measure of the responsiveness of the

Accepted Answer

A)  quantity of a good demanded to changes in income. 
B)  consumer's income to a change in the price of the goods he or she consumes. 
C)  quantity of a good demanded to changes in its price. 
D)  quantity of a good demanded to changes in another good's price. 
A)  quantity of a good demanded to changes in income. 
B)  consumer's income to a change in the price of the goods he or she consumes. 
C)  quantity of a good demanded to changes in its price. 
D)  quantity of a good demanded to changes in another good's price.

Question 14

A university conducts a survey of students, which shows that a 10 percent tuition hike would lead to a 7 percent decrease in the enrollment. If the university wants to increase its total revenue, it should ________ tuition because the demand for education at this university is ________.

Accepted Answer

A)  raise; elastic 
B)  not raise; elastic 
C)  raise; inelastic 
D)  not raise; inelastic 
A)  raise; elastic 
B)  not raise; elastic 
C)  raise; inelastic 
D)  not raise; inelastic

Question 15

Is there any set of relationships between price elasticity of supply and total revenue similar to the relationships between price elasticity of demand and total revenue?

Accepted Answer

No. When the price increases along an up

Question 16

The greater the magnitude of the absolute value of the income elasticity of demand for a good, the more the

Accepted Answer

A)  demand for that good changes when income changes. 
B)  total revenue for firms producing that good changes when income changes. 
C)  price of the good changes when income changes. 
D)  All of the above answers are correct. 
A)  demand for that good changes when income changes. 
B)  total revenue for firms producing that good changes when income changes. 
C)  price of the good changes when income changes. 
D)  All of the above answers are correct.

Question 17

Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that is

Accepted Answer

A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  perfectly inelastic. 
A)  elastic. 
B)  inelastic. 
C)  unit elastic. 
D)  perfectly inelastic.

Question 18

The elasticity of supply equals ________ if the supply curve is horizontal.

Accepted Answer

A)  0 
B)  1 
C)  infinity 
D)  -1 
A)  0 
B)  1 
C)  infinity 
D)  -1

Question 19

If the demand for a good is elastic, the price elasticity of demand is ________.

Accepted Answer

A)  greater than 1 
B)  equal to 1 
C)  between 0 and 1 
D)  less than zero 
A)  greater than 1 
B)  equal to 1 
C)  between 0 and 1 
D)  less than zero

Question 20

For Product X, the income elasticity of demand is 1.16. Which of the following is therefore definitely TRUE?

Accepted Answer

A)  Product X is a necessity. 
B)  Product X is income elastic. 
C)  Product X is a substitute for some other good. 
D)  Product X is something that mostly poor people will buy. 
A)  Product X is a necessity. 
B)  Product X is income elastic. 
C)  Product X is a substitute for some other good. 
D)  Product X is something that mostly poor people will buy.

The price elasticity of demand equals magnitude of the

Redbox rents DVDs for $1 per day via self-service kiosks located across the United States. The CFO of Redbox wants to identify how responsive consumers are to an increase or decrease in the daily price of a rental. The economic concept the CFO wants to understand is

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

-The figure illustrates Anne's demand for books. At ________ a book, Anne's demand for books is inelastic.

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Explain the total revenue test.

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is and the demand for plane tickets is .

A local transit authority charges $1 for a bus ride. An economics study suggests that in the price range from $0.50 to $1.50, the elasticity of demand for bus trips is 1.1. To increase its revenue, the transit authority should

The greater the substitutability between Northwest timber and Southeast timber, the is the cross elasticity of demand between timber from the two regions and the is the elasticity of demand for Northwest timber.

Microsoft raises the price of its Office software by 10 percent. As a result, the quantity of personal computers demanded at the current price decreases by 5 percent. What is the cross elasticity of demand for personal computers with respect to the price of Microsoft Office software?

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is and if the price falls from $8 to $6 demand is .

The income elasticity of demand is a measure of the responsiveness of the

A university conducts a survey of students, which shows that a 10 percent tuition hike would lead to a 7 percent decrease in the enrollment. If the university wants to increase its total revenue, it should tuition because the demand for education at this university is .

Is there any set of relationships between price elasticity of supply and total revenue similar to the relationships between price elasticity of demand and total revenue?

The greater the magnitude of the absolute value of the income elasticity of demand for a good, the more the

Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that is

The elasticity of supply equals ________ if the supply curve is horizontal.

If the demand for a good is elastic, the price elasticity of demand is ________.

For Product X, the income elasticity of demand is 1.16. Which of the following is therefore definitely TRUE?

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

Exam 4: Elasticity

The price elasticity of demand equals magnitude of the

Redbox rents DVDs for $1 per day via self-service kiosks located across the United States. The CFO of Redbox wants to identify how responsive consumers are to an increase or decrease in the daily price of a rental. The economic concept the CFO wants to understand is

"The number of substitutes available affects the price elasticity of demand for a good. So one way to know if apples and oranges are substitutes for each other is to look at the price elasticity of demand for each." Comment on this assertion.

-The figure illustrates Anne's demand for books. At ________ a book, Anne's demand for books is inelastic.

On December 10 the price of a Christmas tree is $50 and 100 trees are purchased. On December 20 the demand for Christmas trees decreases so that the price falls to $30 and 20 trees are purchased. From this set of facts, the

Explain the total revenue test.

The price elasticity of demand for gasoline is 0.40. If the price of gasoline rises by 20 percent, there will be

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is ________ and the demand for plane tickets is ________.

A local transit authority charges $1 for a bus ride. An economics study suggests that in the price range from $0.50 to $1.50, the elasticity of demand for bus trips is 1.1. To increase its revenue, the transit authority should

The greater the substitutability between Northwest timber and Southeast timber, the ________ is the cross elasticity of demand between timber from the two regions and the ________ is the elasticity of demand for Northwest timber.

Microsoft raises the price of its Office software by 10 percent. As a result, the quantity of personal computers demanded at the current price decreases by 5 percent. What is the cross elasticity of demand for personal computers with respect to the price of Microsoft Office software?

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is ________ and if the price falls from $8 to $6 demand is ________.

The income elasticity of demand is a measure of the responsiveness of the

A university conducts a survey of students, which shows that a 10 percent tuition hike would lead to a 7 percent decrease in the enrollment. If the university wants to increase its total revenue, it should ________ tuition because the demand for education at this university is ________.

Is there any set of relationships between price elasticity of supply and total revenue similar to the relationships between price elasticity of demand and total revenue?

The greater the magnitude of the absolute value of the income elasticity of demand for a good, the more the

Goods and services that can be produced by using commonly available resources that could be allocated to a wide variety of alternative tasks have a supply that is

The elasticity of supply equals ________ if the supply curve is horizontal.

If the demand for a good is elastic, the price elasticity of demand is ________.

For Product X, the income elasticity of demand is 1.16. Which of the following is therefore definitely TRUE?

What Is Economics

The Economic Problem

Demand and Supply

Efficiency and Equity

Government Actions in Markets

Global Markets in Action

Utility and Demand

Possibilities, Preferences, and Choices

Organizing Production

Output and Costs

Perfect Competition

Monopoly

Monopolistic Competition

Oligopoly

Public Choices, Public Goods, and Healthcare

Externalities

Markets for Factors of Production

Economic Inequality

Uncertainty and Information

Filters

If the price elasticity of demand for gasoline is 0.8 and the price elasticity of demand for plane tickets is 2.2 then the demand for gasoline is and the demand for plane tickets is .

The greater the substitutability between Northwest timber and Southeast timber, the is the cross elasticity of demand between timber from the two regions and the is the elasticity of demand for Northwest timber.

-The figure above illustrates a linear demand curve. If the price rises from $6 to $8 demand is and if the price falls from $8 to $6 demand is .

A university conducts a survey of students, which shows that a 10 percent tuition hike would lead to a 7 percent decrease in the enrollment. If the university wants to increase its total revenue, it should tuition because the demand for education at this university is .